Autodata: GM's Highest Incentives Still Equal Lower Sales

DETROIT, March 2, 2005; Reuters reported that General Motors Corp. led its rivals in offering hefty consumer incentives to help boost its U.S. sales in February, but the month ended not with a bang, but a whimper for GM, which saw its sales of new cars and trucks drop 13 percent.

The world's largest automaker, hurt by sluggish demand for its older sport utility vehicles and an underperforming lineup of new cars, also lost nearly two full percentage points of vital U.S. market share compared with January, according a report on Wednesday by industry tracking firm Autodata Corp.

GM offered an average of $3,814 in cash rebates and cut-rate financing deals on every new vehicle it sold in February, Autodata said. That was more than any other automaker, but just $51 above the average total of $3,763 in incentives per vehicle at Chrysler.

Unlike GM, the resurgent U.S. unit of DaimlerChrysler AG posted an 8 percent gain in its February sales. It has been bolstered by the continuing success of hot new products like the Chrysler 300 sedan.

The use of profit-eroding incentives has eased somewhat among Detroit's traditional Big Three automakers this year compared with the high levels seen at the start of 2004.

But analyst Ron Tadross of Banc of America Securities cited them as a continuing cause for concern in a report on Monday, when he cut his rating on GM and Ford Motor Co. shares to "sell" from "neutral."

"We estimate every 100 basis point increase in interest rates could raise GM's incentives costs by $300 per vehicle or $1.50 per share," Tadross said in a note to clients.

GM's total incentive offers were 9 percent lower in February compared with the same month a year ago, and Chrysler's were down 6 percent, Autodata said.

At Ford, where incentives averaged $3,229 per vehicle in February, the level was also 6 percent lower than a year ago.

Conversely, as they step up their assault on the U.S. market, total discounts offered by Asian and European brands were up 17 percent last month over February 2004, Autodata said.